Science Applications International Corporation Stock Price: Quote, Forecast, Splits & News (SAIC)

Perplexity Finance

SAIC

Science Applications International Corporation

SAIC

Overview

Financials

Historical Data

$104.91

+$1.11

1.07%

At close: Jun 12, 4:00:00 PM EDT

$105.40

+$0.49

0.47%

After hours: 7:47:02 PM EDT

Change

+$1.11

1.07%

Financial Profile

Prev Close

$103.80

Market Cap

$4.92B

Day Range

$102.93 - $104.99

Open

$103.77

P/E Ratio

14.7

52W Range

$94.68 - $156.34

24H Volume

$46.22M

Dividend Yield

1.41%

EPS

7.12

Key Issues

Recent Transcripts

Q1 revenue grew 2% with stable outlook, margin recovery expected despite procurement delays.

$2.4B, strong pipeline

SAIC delivered strong Q4 results with 6% revenue growth and robust margin expansion.

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice.

Market Cap: $4.9B
IPO Date: 9/16/13
CEO: Ms. Toni Townes-Whitley
Fulltime Employees: 24K
Sector: Technology
Industry: Information Technology Services
Country: US
Exchange: NASDAQ

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Science Applications International Corporation Stock Price: Quote, Forecast, Splits & News (SAIC)

Perplexity Finance

SAIC

Science Applications International Corporation

SAIC

Overview

Financials

Historical Data

$104.91

+$1.11

1.07%

At close: Jun 12, 4:00:00 PM EDT

$105.40

+$0.49

0.47%

After hours: 7:47:02 PM EDT

Change

+$1.11

1.07%

Financial Profile

Prev Close

$103.80

Market Cap

$4.92B

Day Range

$102.93 - $104.99

Open

$103.77

P/E Ratio

14.7

52W Range

$94.68 - $156.34

24H Volume

$46.22M

Dividend Yield

1.41%

EPS

7.12

Key Issues

Earnings

Report Date

Jun 2, 2025

Reported Revenue

1.9B

Beat +0.47%

Avg 1d Change

6.91%

Report Period

Q1 2026

Reported EPS

1.9

Miss -10.28%

Implied Move 1d

8.53%

Transcript

10m 7s

Good morning, and thank you for joining FCIC's First Quarter Fiscal Year twenty twenty six Earnings Call. My name is Joe DeNardi, Senior Vice President of Investor Relations and Treasurer. And joining me today to discuss our business and financial results are Tony Townes Whitley, our Chief Executive Officer and Prabhu Netrajan, our Chief Financial Officer. Today, we will discuss our results for the first quarter of fiscal year twenty twenty six that ended 05/02/2025. Please note that we may make forward looking statements on today's call that are subject to known and unknown risks and uncertainties, that could cause actual results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks including the Risk Factors section of our annual report on Form 10 ks. We may elect to update the forward looking statements at some point in the future, but we specifically disclaim any obligation to do so. It is now my pleasure to introduce our CEO, Tony Townes Whitley.

11m 9s

Thank you, Joe, and good morning to everyone on our call. I will focus my remarks on an update of our current operating environment followed by a review of our business development and financial results in the quarter. As I did last quarter, I want to start by thanking our employees. For their dedication to our mission and their support of our customers. While the operating environment has stabilized in recent months, and recent budget developments provide improved clarity around future spending, we continue to see higher rates of turnover among our customers contributing to procurement delays and award timelines moving to the right. The year to date net impact to our financial results from the government's efficiency initiatives remain nominal with an estimated annualized revenue impact of less than 1%. We expect conditions to remain very fluid over the next few months, as budget negotiations play out and agencies continue to implement the strategic priorities of this administration. Our initial assessment of the President's government fiscal year twenty six budget request is that the overall funding levels and strategic priorities create both opportunities and potential challenges, but on balance are supportive of our growth strategy. We were encouraged to see a solid request for defense spending, which a proposed increase of 13%, including reconciliation and political support to provide additional funding in excess of that requested.

12m 32s

As the administration prioritizes spending with a focus on readiness, we do expect certain branches of the DoD to see stronger budget support than others, with a particular emphasis on the Navy, Air Force and Space Force. While the Army may face a more challenging budget outlook, we believe the balance we have across the Department of Defense with roughly comparable levels of revenue from these four branches positions us well to navigate these uncertain times. The mission criticality of our work is evidenced by the durability of our portfolio throughout DOGE related scrutiny in recent months and our ability to support many of the Department of Defense's 17 top priorities as detailed by Secretary Hagsett. We have key programs and demonstrated technical leadership in a number of these, most notably Southwest border activities, Homeland Missile Defense, Virginia Class Submarines, priority critical cybersecurity, core readiness, and combatant command support agency funding. The strategy we began implementing roughly eighteen months ago to pivot our portfolio to mission and enterprise IT aligns with the priorities of the new administration the acceleration of technology adoption to increase lethality, and efficiency. The Space Development Agency's recent decision include a mission integrator role for Tranche three after having not done so for tranches one and two highlights the importance of integration to achieving complex outcomes on schedule.

14m 2s

SAIC was awarded this new cost plus program role in Q1 part of a $55,000,000 contract where we will leverage our proven expertise in mission integration and digital engineering to drive program success at speed. Regarding non defense budgets, the areas of focus for SAIC at our five largest civilian agency customers were well supported, including over 1,000,000,000 of additional budget for the Department of Transportation to fund improvements at the FAA. Over $40,000,000,000 to the Department of Homeland Security, focused in part on procuring advanced border security technology. Stable funding for our Department of State IT operations, as evidenced by the recent two year extension awarded for our Vanguard program. Specific support for technology improvements to drive greater efficiency at the Department of Treasury, and over $1,000,000,000 for the Department of Veterans Affairs to accelerate the modernization of health records and simplification of legacy IT systems.

15m 4s

As a reminder, annual revenue from these top five agencies represents over 70% of total revenue for our civilian segment. I will now provide a review of our first quarter business development and financial results. We delivered net bookings of $2,400,000,000 for a book to bill of 1.3. Which included securing a key recompete, the five year system software life cycle engineering contract for the Army. And an eight year IT services program for the Pension Benefit Guarantee Corp. In addition, subsequent to quarter close, we have received awards with total contract value exceeding $2,000,000,000 including a two year extension on our Department of State Vanguard program and a large new business win with the Air Force. While certain of the quarter to date awards remain in the protest window and may not be reflected in second quarter bookings as a result, we are pleased with the progress we are seeing in our business development efforts. In the first quarter, we submitted proposals with a total contract value of $7,000,000,000 and we're seeing continued strong momentum in submit volume in the second quarter and expect to reach approximately $28,000,000,000 to $30,000,000,000 for the full year. Our backlog of pending awards remained steady at approximately $20,000,000,000 and provides us with good line of sight into continued improvement in bookings as we target 1.2 trailing twelve month book to bill in the coming quarters.

16m 33s

While our pipeline and backlog of submissions continues to support reaching this target by the second quarter, it is reasonable to assume that procurement delays could lead to this moving to the right by one to two quarters. We do not expect these potential award delays to materially impact our revenue performance in fiscal year twenty twenty six or fiscal year 'twenty seven, assuming the broader operating environment remains stable. I will now review our first quarter financial results. We reported revenue of 1,877,000,000.000 representing growth of approximately 2% due to the continued ramp on new and existing programs, including T Cloud, IMDC2 and GMAS, which offset lower revenue from contract completions and transitions. Adjusted EBITDA in the first quarter was $157,000,000 resulting in an adjusted EBITDA margin of 8.4%. Margin performance was impacted by the typical seasonality of investments including our healthy submit volumes and higher cost on a fixed price program in our space business. Subsequent to quarter close, we received favorable option period extensions on this program and moved into the sustainment phase of this program which we expect will contribute to improve financial performance going forward. Adjusted diluted earnings per share of $1.92 was flat year over year as a lower share count offset a higher tax rate and lower adjusted EBITDA in the quarter.

18m 1s

Free cash flow was negative $44,000,000 and was impacted by the timing of receivables on two programs, which resulted in approximately $75,000,000 shifting out of the first quarter. Shortly after quarter close, we caught up on one of those two programs are making progress on the second and do not expect this to impact full year guidance. The delays experienced are not related to program performance, but rather to new personnel and processes in place at certain customers as we navigate these uncertain times with them. Overall, we're off to a solid start in fiscal year twenty twenty six with palpable enthusiasm for the momentum we are building across the company. We expect to make further demonstrable progress against our strategy, to position SAIC for sustained profitable growth in the coming quarters and look forward to sharing our results with you. I'll now turn the call over to Prabhu.

18m 55s

Thank you, Tony, and good morning to those joining our call.

18m 58s

My remarks today will focus on our outlook for FY 2026 and an update on our capital deployment plans. Our guidance for revenue in a range of 7,600,000,000.0 to $7,750,000,000 represents organic growth of approximately 2.5% at the midpoint. We continue to expect growth of 1% to 3% in the first half of the year and 2% to 4% in the second half, with the improving growth driven by new business ramping up and a more modest headwind from contract transitions in the fourth quarter. Should the ramp on new business move to the right as a result of the macro environment, more of our growth in FY 2026 will need to come from on contract growth. This outlook is consistent with our prior framework. We are reiterating our guidance for adjusted EBITDA and adjusted EBITDA margin. First quarter margins were impacted by the timing of investments that we typically see higher bid and proposal costs related to procurement delays and an unfavorable profit adjustment on a fixed price program in our space business. As Tony mentioned, subsequent to quarter close, we received an award exercising option periods for this fixed price program as it transitions into the sustainment phase over the coming weeks which along with the execution initiatives we've implemented should help improve margins going forward.

20m 24s

While we have some work to do to offset the first quarter headwind from these items, we remain focused on executing and delivering on our full year margin guidance of 9.4% to 9.6%. As we've signaled before, our flexible cost structure permits us to calibrate our spend in line with the macro environment. We are reiterating our full year adjusted diluted earnings per share guidance of 9.1 to $9.3 which assumes an effective tax rate of 23% and a weighted average share count of approximately 47,000,000. Our free cash flow guidance of $510,000,000 to $530,000,000 equates to approximately $11 per share of free cash flow. Despite 1Q free cash flow being impacted by slower collections on two programs, we expect trends to improve in 2Q. As a reminder, consistent with FY 2025, the timing of free cash flow in FY 2026 will be impacted by one additional payroll cycle in our first and third quarters, which results in approximately $125,000,000 of cash outflow each quarter. With regard to capital deployment, we repurchased approximately $125,000,000 of shares in the first quarter. We continue to target annual repurchases in a range of $350,000,000 to $400,000,000 with additional capacity of 150 to 200,000,000 for either capability focused tuck in M and A or incremental share repurchase.

21m 58s

We remain well ahead of our three year capital deployment commitment on repurchases and have ample capacity capability based tuck ins. With that, I will turn the call over to the operator to begin Q and A. Our first question comes from the line of Gavin Parsons. From UBS.

22m 34s

Hey, thanks guys.

22m 35s

Good morning. [indiscernible] You you mentioned the operating environment has has stabilized, but still seems to be a lot of new directives coming out of say, the DoD in particular. So just hoping you could just give us an update on what you're hearing from the customer and some of budget priorities Thanks.

22m 58s

Yeah, thank you for the question, David. So, as we talk to the operating environment, I would say the things that have stabilized, as you know, we came through the last few months with a focus from GSA and an audit relative to the Doge effort. And that we believe has has settled out. We were able to respond to GSA, identify the programs and the mission critical role that we've been playing and quite frankly, have had very few conversations since submitting all of our information. And I think we got to the right place of understanding the role that SAIC is playing. At the agency level, we do have significant turnover of personnel. Occurring in the agencies, particularly acquisition personnel, which has been more demonstrable I think than maybe initially understood in terms of how many acquisition personnel are part of the turnover process.

23m 54s

We've had some new processes at the agencies relative to funding and how they engage move forward in basic contracting processes. As well as you've seen, obviously, some executive orders from [indiscernible] ongoing focus on lethality and mission criticality of the work. And how they're looking to move forward with commercial technology, which again, we would argue aligns with the strategic pivot we've been doing on our portfolio towards more enterprise mission solutions and how we deliver those. I would say, we're still obviously assessing all of the most recent executive orders that are out. But on par, we believe that it aligns more with our strategy going forward and we're focusing on how we bring those solutions faster and faster to the agency customers.

24m 50s

Have you seen the procurement environment get more competitive as maybe the bid process has become more disruptive? I have a fair question on competitiveness. As you know we've been amping up our submissions and being very selective in terms of being on strategy with the bids that we've been making. And as we become more and more focused on mission enterprise IT, I fully expect a more competitive environment, not just as a function of the new administration, but of the type of work that we are actually bidding. That said, with the higher rate of submissions and we look at our rates, even if which have tended to be on the new business side, higher than the industry average. But even accounting for any slip in those back towards an industry average, we feel confident that we have a submission pipe, pending award pipeline and win rate applied to drive the growth that we've been we've been communicating to the street and the guidance that we've offered.

25m 54s

Hey Gavin, the only thing I would add to that would be we are not seeing sort of LPTA type trends, procurements still seem to be best value and that's where the focus is. So some price pressure, which is typical to see, not back to the 2012, twenty thirteen circa.

26m 17s

Okay. Thank you, Tony and Prabhu.

26m 20s

Thank you. One moment for our next question. Our next question comes from the line of Gautam Khanna from Cowen.

26m 35s

I was on mute there, guys. Appreciate the comments this morning.

26m 40s

I was curious if you could just remind us of what the known headwinds are now that Vanguard's got got an extension? As we look out over the next twelve to twenty four months from contracts that are either being broken up as you recompete them or things that just the known headwinds from losses already incurred? If you could just frame that. Nice to hear from you this morning. Yeah, no worries. Let me start and I think Prabhu will Prabhu will round out. As relates to headwinds on the recompete side, our view really hasn't changed since last quarter. We've got, as you know, our NASA program loss from last from last year that will round out in third quarter of this year. That's sort of our only known recompete [indiscernible] Of any meaningful size. We also, as you know, made the conscious decision to no bid our lower margin Cloud One program and the headwind there is reflected in our Q1 results. We've got some increased modestly in second quarter, and then we'll stabilize throughout the rest of the year and look at an annualized $200,000,000 of of run rate there. But that was a conscious decision to go more strategically in our cloud services area.

27m 56s

Outside of that, we don't see any known, there's no known recompete risk. As you know, we had filed a pre award protest on one program that was announced recently. And so we're not in a position comment on that particular program. However, that program we did get a six month extension. [indiscernible] we don't see that having an impact on our FY '20 financials. So, I look at those three areas, I don't see any impacts uniquely from what we have already communicated to the street. [indiscernible] right on Tony. Gotham NCAPs, which is the loss of the NASA losses, laps out at the end of our Q3 and should be less of a headwind heading into Q4 of this year. That's really the only known one aside from the Afram's pre award protest. Which is unlikely to really impact this year's revenues.

28m 53s

Mentioned in the in the earnings statement, I just wanted to highlight that we did mention and we want to be cognizant with some of the DoD conversations that have happened, as well as the Army Transformation Initiative that was launched that we do see across our DoD sector that there will be places of priority and deprioritization that we are tracking very directly. So, in terms of a headwind, I think our Army business, we've been looking at the impact there. But we are also very well positioned within our Air Force Combatant Command, Navy and Space and Intel businesses to offset any challenges there.

29m 34s

That's helpful, thank you. Just on the the cost overrun that you guys described in the prepared remarks, could you frame the nature of that and how you mentioned the work's been extended, but how comfortable are you on kind of recovering from the level at which you had the negative EAC?

29m 56s

Yeah, so I think, again, I'll start out. I sure probably have some comments here as well. Look, this is a program, a fixed price program, a tech development program with [indiscernible] it is fairly unique across our portfolio. Nature and the complexity of the work we're doing here. And we have seen some costs initially driven by some challenges on the tech development phase of the program. However, we do feel good about the progress we've made on the technical side and the feedback we've had from the customer relative to that progress. We've got an EAC that's captured all the additional cost required to get us into the sustainment phase over the next few months. And as Prabhu and I both mentioned in our remarks, option period extensions that we've received most recently. Give us some relief in terms of other hardware delays and things we've seen that have been outside of our control of the program that those will be addressed. So going forward, as we look at Q1, I would say it was more anomalous versus indicative of a concern with that program. We are doing work, quite frankly, that we're very excited about for SDA.

31m 3s

And there's some additional profitable opportunities with that work. We feel like we're rightsizing the ship Obviously, we're tracking it very, very closely in a very detailed way. But we feel like we've turned the corner. Prabhu, any other thoughts?

31m 20s

That was perfect, Tony. Gautam, you know, this is somewhat unique of a program for us, as we're sort of building the ecosystem of applications that can be deployed on orbit. And I think, you know, as Tony said, we've got a good handle on the baseline, and we do expect to get into sustainment in the coming weeks, so the core development part of it is coming to an end and it's getting a lot of time from the management team. Team, as you can imagine, and we're doing everything we can to get into the sustainment phase. We do expect to get healthier on the program, and we do believe that EAC adequately the remaining risk over the next couple of months on the program. As we're in the development phase.

32m 7s

Thanks guys.

32m 10s

Thank you. Thank you.

32m 12s

One moment for our next question. Our next question comes from the line of Jason Gersky from Citi.

32m 23s

Hey, good morning, everybody. Tony mentioned yeah, good morning. You mentioned both civil and army during your prepared remarks. You've got five business leaders there, Air Force, focused on the army space, Navy and the civilian business. Can you just maybe kind of do a walk around the world here and talk about the atmospherics and each one of those end markets, so to speak, You you mentioned the fiscal twenty six budget showing some support in some areas. You mentioned the civilian has got 70% of your programs you feel like you've got good support for. But maybe just, you know, go through each one of those end markets there and talk about the risks and opportunities for each.

33m 10s

Sure.

33m 11s

Thank you, Jason, for the question. So, let's start with our civilian business. As you know, we report that separately. We've been focusing on, really, even over the last year, as we said, the civilian business was a a critical one for us. We want to see further growth in that business. And we have seen, quite frankly, growth in that business. We expect margin improvement in that business as well. And part of that's because of the footprint that we have, where we're located, the agencies we're located, and where the funding we see going towards the agencies and the work that we are currently doing. So, if we look at work in the CBP arena within Department of Homeland Security, if we look at the role that Treasury is playing in the work that we do in supporting the cloud infrastructure for that. For that agency, that department, as well as obviously IRS within that department. As we look at State Department and the role they're playing and the consolidation of other functions within State Department, we see that as an aggrandizing the IT back backbone there within State Department. We look at Department of Transportation and FAA and the clear investments that are being made in air traffic controller training, as well as the FAA infrastructure.

34m 26s

If you just take a look at where we are positioned best, they are also the areas where the administration is looking to invest, looking to bring more commercial technology, and I believe we are well positioned there. Hence, why we feel [indiscernible] I won't go to the word bullish at this point, but I would suggest that we do believe we're not in the midst of significant headwinds in our civilian business. And we see opportunity there. If you go to the DoD front, we have four business groups that are on different parts of the National Security Intelligence infrastructure. I mentioned Army, the Army Transformation Initiative. With significant cuts and shifts that are being made out of the RDT and E and other types of line item within the Army. We are positioned well with our recent win that we announced with S3i. To continue our for Huntsville and the work that's being done out of the Aviation Missile Command there. But we're also positioned in other areas around Aberdeen Proving Ground and other types of work in our C2 arena. That is our fastest growing opportunity within the Army is in our command and control capabilities, what we call our C2 And that arena is one that we see will be funded.

35m 47s

And continue to be funded and dollars are being reallocated in that position. If we look across our Air Force and Combatant Commands, again, a very has been a fast growing part of our business. Are very well positioned in all mission critical work there. If we look at the Indo Pacific and the work that we do for Indo Paycom, the Joint Fires Network, the cloud based C2 work, We feel very well positioned there in the current programs that we have, as well as in a pipeline that is significant. A forward looking pipeline on the Air Force side. Space and Intel. Significant pipeline we built around our intel business, as well As you've heard, some of the ramp that we mentioned in terms of growth. On GMAS and other programs within our space. And we've mentioned, obviously, a recent win on integration within FDA. This is a fast growing area for us in the space, particularly space defense. We feel strongly there. And then our Navy business, which obviously is a range of work that we do across programs like MARC 48, our Torpedo after body tail cone support, all the way to the work that we do in C2 and command and control in San Diego.

37m 2s

All of those we see areas where the Navy were understanding the signals A little less clear exactly where the major investments will be, but as the Navy takes on more commercial and cloud based, we can leverage from the cloud based work we've done in Air Force and civilian into the Navy. So, we feel pretty there and their results have been have shown us that we can demonstrably grow there without structural challenges and in fact improve margins. So, when I look across the business, left to right, I feel like we've got enough diversity in the portfolio to offset risk. As well as we've got opportunity in the portfolio to support the guidance we've offered to [indiscernible] Okay, great. And maybe just one quick follow-up, and and, probably, maybe you can opine here as well given your experience with awards and budget flushes and all that kind of good stuff. A unique about fiscal twenty five given the full c full year CR? I know we haven't necessarily done this before, but does this make it more challenging for timely awards? Does it set us up for more awards to happen in the third calendar quarter. Just kind of curious, you know, what kind of restraints and opportunities there are around this full year CR and what it means for bookings this year?

38m 25s

Because you alluded to you know, on contract growth needing to be there for you if awards slip to the right. So I'm just kind of curious how this is all gonna play out this year from your perspective.

38m 39s

Hey, Jason. Thank you for the question. I'll go first and then Tony will add some additional color here as we go. You know, big picture, we've really not seen a slowdown in the actual solicitation. Of proposals. So the environment continues to be pretty robust, I would say, and we are expecting to have a good submit quarter in Q2. We are seeing some delays especially around the larger awards.

39m 4s

Let's call it circa billion dollars plus. That is going through some extra scrutiny inside of the various agencies to ensure that the programs and the contracts are delivering real value to The US tax taxpayer. So we're seeing a little bit of that but it's more anecdotal than not, and it's hard to really pick a trend and say, therefore we are expecting to see that sort of play out over the rest of the year. In reality, I think we did see a slew of things happen right after we finished Q1. And we noted in excess of $2,000,000,000 of contracts, about half of which was actually new business for us, So we're cautiously optimistic that maybe the gates are starting to open up a little in terms of the actual announcements. As we said in the prepared remarks, I think for the near term, instead of relying on new business to generate the ramp needed to get to the comfortably get to the guide, the reality is the team is focused on contract growth in the near term, and Q1 was actually a really solid quarter for on contract growth. So I would say, starting with maybe the premise of the question around the CR, I think the CR feels a little bit different than prior CRs.

40m 21s

And maybe a little more flexibility at the customer level as they navigate a very uncertain environment on their end, But the reality is, I think we are cautiously optimistic that if we stay focused on generating good on contract growth for the next quarter or two, there's enough in the way of new stuff out there that even if things get delayed by a quarter or so, we don't really expect to have a significant impact for the year. Tony?

40m 49s

No, Prabhu. And I think we are trying to assess all the variables The CR is one. I think Prabhu mentioned the flexibility in that CR is something we haven't seen previously. So, it feels a little bit different You offset that with personnel turnover and other changes that may create more of the impact than maybe the CR itself. We're working through those, but we haven't seen any single trend that would be so dominant that it would affect or color, if you will, the way we look at the year. I think it's interesting to look at our first quarter submits And the second quarter, we think, will be just as robust It's an interesting environment where we are able to submit proposals and we are getting awards that are occurring, the question will be, what does the year rely on? It's a combination of, as it's always been on contract growth. If we had seen a slowdown there, we'd be concerned and but we have not. We've seen that hold, as well as we've got 19,800,000,000.0 in pending awards that we expect to adjudicate over the next few quarters here. And be able to hold to the expectations we set of a trailing twelve month 1.2 book to bill this year.

42m 4s

Okay, great. Thanks. I'll pass the line.

42m 8s

Thank you, Chase.

42m 10s

Thank you. One moment for our next question. Our next question comes from the line of Sheila Kahiolo from Jefferies. Good morning, guys, and thank you. So, Tony, you just talked about this a little bit, that you're feeling more confident with the pipeline and the conversion but the trailing twelve month book to bill is 0.8. So how do you think about that relative to your guidance on the exit rate for the year implied at a mid single digit growth rate? How do you get there in terms of the recompetes and the new book of business? That you might have?

42m 45s

Hey, good morning, Sheila. Thank you for the question. Hey, look, from a compare look, we had a tough compare Q1 to Q1 for the trailing twelve month. We had a significant Q1 in the prior year. In quarter book to bill, I was pleased. Obviously, we would have liked to pull a couple of deals that came right after the quarter close, if we had had a week difference in timing, I think we'd be having a different conversation right now in terms of the likelihood of our trailing twelve month getting to 1.2 by the end of H1, which is I think the premise of your question. Given what's occurred since the quarter close, what we see in our in sites for Q2 and Q3 we still feel fairly confident that we are able to get to that trailing twelve month this year. And obviously, that's assuming that the award environment continues and what we've seen and there's nothing drastically affecting that over the next few months and quarters. So from that perspective, And then, I think the second part of your question, Sheila, was correlated to what what's the book to bill needed relative to holding our guide for the entire year from a revenue perspective.

43m 53s

And obviously, that's a combination of the the on contract growth that Prabhu just mentioned, ramp up on key programs, We mentioned some awards that have come in. We'll see what the protest environment looks like relative to those awards and whether those ramp ups or transitions can begin even earlier than anticipated, which again, help to underpin the revenue call for the year. We're not coming off our guidance because we do have line of sight to how we can grow to the expected level And obviously, a combination of new business that we expect to land in the next couple of quarters, as well as our our current path on contract growth. The last part of that will be to make sure that we we don't have any self inflicted wounds on the recompete side. And as I've already said earlier, I think in response to an earlier question, in terms of what we've seen to date, we feel still fairly confident that we are starting to address the recompete issue and it will not create the headwind for us this year.

44m 54s

Sheila, the only thing I would add to that is that in order to get to the 1.2 trailing twelve month, we need somewhere between 3.5 and $4,000,000,000 of net bookings in Q2. And since the end of the quarter, we've generated bookings of over $2,000,000,000 so I'm going to say we're about halfway there to what we need to do for the remaining two months of the quarter. As we signaled in the script, if things do slip, we expect the slip to impact maybe a quarter or two, when we get to 1.2, but the reality is we we feel good about getting to that 1.2. Which should get us to a place where we can support the 4% to 5% revenue growth rate guide that we've offered for FY so cautiously optimistic, but there are a few things that are outside of our control right now and we are watching the environment. Our new business win rate is pretty good, has remained pretty healthy through the first quarter of this year, and I think we just have to make sure that we are executing to what we've committed to.

46m 2s

Super helpful color. And maybe if I could ask one more on margins. Margins of 8% in the quarter. Implies a ramp 100 basis points to meet the full year guidance. So maybe two things on the margins. One, civil was better in the quarter. How does that play a lot in the second half? And then can you quantify the impact from that space fixed price program and is there a milestone needed to ensure that it's sort of net neutral to earnings? [indiscernible] On civil, I may hit the space program. Go ahead. We're gonna tag team. Go ahead.

46m 37s

Sheila. On a big picture, civil actually saw a little bit of margin expansion in Q1 relative to Q1 of last year. And we expected that trend to continue over the course of the year. In addition to that, the team's done, I think, an admirable job getting fuller control of our cost baseline, As you know, vast majority of our T and M and fixed price work is in our civil business, so the team is doing a pretty good job and we expect to continue to see the ramp there. I think Q1 EBITDA margins were up 30 to 40 bps compared to Q1 of last year, and the business grew 7% or 8% in Q1, so they've done what one would have thought would be a harder combination of things to accomplish, which is top line growth as well as margin expansion. I think on the space side, I would say it's about 3,000,000 to $5,000,000 impact from that single program, and in addition to that, we had cost overruns relative to the very active proposal activity that we had, in Q1. So we view the second, the latter of that to be more timing. And so I think between the two of them, we probably had about a 50 to 60 basis point impact to the quarter, which would normalize back to about the 9%, which coincidentally happened to be the 9% that we started last year's Q1 as well, so apples to apples, I think we see a bridge back to nine at Q1, [indiscernible] and on the space business, as we said, we are expecting to get into the sustainment phase of this program in the coming weeks.

48m 10s

We do have the periods extended and therefore we do expect to get healthy on the program starting in Q2, but definitely over the course of the year.

48m 22s

I think that was Thank you. Yes, was it. Thank you.

48m 26s

Thank you.

48m 28s

Thank you. One moment for our next question. Our next question comes from the line of Tobey Sommer from Truist.

48m 38s

Thank you. I wanted to ask for your early perspective on an element of the DEF SEC memo that was out recently. How do you think about the risk to yourselves in the industry that federal customers [indiscernible] directly from a service provider whereby a prime contractor is not an integrator or a consultant in quotes.

49m 7s

Hey, Toby. Good to hear from you. Yeah, fair question. Obviously, we are all trying to to assess the most recent communications that are coming out of DoD. Look, think initially, the conversation there was relative to management consulting and And we have gone through a pretty extensive audit and conversation with the Doge infrastructure as well as many agency leaders. And I personally engage with customers understanding what the work of SAIC is and that it is in fact not management consulting as it was defined. Similarly, as you hear words on integration, sort of the middle person or middle man role, the reseller role. There are very few areas in our portfolio where we play that type of role. In fact, we are a direct provider of solutions and capabilities and what we'll call hands on keyboard kind of capability And our customers are very much aware of that. And we have reconfirmed that through our most recent months through our GSA audit and are reconfirming that now with the customer set. I think, look, things will shake out. I'm sure there's a lot of language that's being parsed. Right now. The role we play and even some of the recent awards that we've announced and some we will announce I think indicates not only the mission criticality of our work, but how we deliver that work in more and more commercial models.

50m 31s

We have software as a service kinds of capabilities. We can sell our capabilities right off of marketplaces that exist. And our customers understand commercial nature of what we do. And quite frankly, I think will qualify us in the in the group that is being perceived as the approach that DoD is trying to take going forward. So of course, we're not Pollyanna's share. We're keeping our ears open and obviously trying to make sure we understand any signals coming from the Department of Defense. But at this point, we don't see significant risk as a result of recent communications. [indiscernible] for that answer. One follow-up for me. Sort of how has your the development of Doge and now the the budget process and priorities with the skinny budget and what's going on in Congress. How has that informed how you think about future new business capture in your bid and proposal activity? Does that has that led to sort of a refinement as you look out twelve, twenty four, thirty six months to change at all the posture of what you've been looking at?

51m 54s

That's a great question, Toby. And I appreciate it. Many levels. I would suggest to you, going back to the strategy we put in place, just over eighteen months ago. That strategy prior to this administration, was pivoting our portfolio towards more enterprise and mission IT solutions that are delivered in a number of commercial models directly to our customer set. In many ways, we've been looking to refine that and expedite our ability to further package and and offer that capability again, within the constructs and the confined you will, of where we feel differentiation occurs, particularly in our digital engineering capability our data platforms, our operational AI, and in our secure cloud We've been able to do that with sprints, and if you will, what we call DevSecOps, but different forms of sprints that we've been able to sell commercially directly off marketplace is where not only DoD, but customer sets have appreciated the speed with which we've been able to do mission critical work. So, if you think about the strategy as a horizon one, we said for the next in fact, for the first three years, which now we're halfway through, we are probably speeding up our efforts in the path that we were already on rather than selecting a new path.

53m 14s

We were already moving in the commercializing of our IT capability and embedding of that across our sustainment contracts and other types of work that we do for DoD, intel, and civilian customers. I think the other areas we're looking to refine, we are are heavy into, as you know, we've been expanding our venture programs. So, bringing in new technologies through ventures, as well as partnering very strategically with new players, existing players, As we've always said, we've been able to embed technology very quickly. And we've got great examples for that. I would argue that the strategy that was in place was directionally correct, slightly independent of political headwinds or tailwinds. That we are in fact aligned, particularly in areas of lethality, areas that the administration has shown for DoD, mission critical work. We've not only survived, but I think we've come through an audit of our work with GSA that is exemplified the mission criticality of it. And I think we're right now expediting our efforts to get to more and more commercial solutions over the next year or so. So in many ways, we feel we feel like we're on the right path. We just have to go faster.

54m 33s

Thank you very much.

54m 36s

Thank you. One moment for our next question. Our next question comes from the line of Colin Canfield from Cantor Fitzgerald.

54m 47s

Hey, thank you for the question. Maybe following up on Sheila and a little bit of what Gautam are questioning on, but can you just level set us on how we should think about defense and civil's margin trajectory versus the multiyear target So I think Tony, you said civil margins get better from here and it sounds like 1Q should be trough in defense. But just maybe understanding essentially kind of what are the big moving pieces within the segment level margins versus your targets? Thank you.

55m 15s

Let take first.

55m 16s

Okay, Hey, Colin. I'll take that one first here. On the civil side, I think as we said, do expect margins to improve from here on out, given the number of things have going on inside of the business and candidly, they're performance in Q1 is consistent with commentary we've shared for a couple of quarters now that we do expect margins to pick up. On the defense and intel side, I think we tend to think about this in the context of our bid thresholds, and we have different thresholds here for cost plus, T and M, and fixed price work, inside of the defense and intel business, and we are continuing to see bid volumes increase with higher than bid thresholds. And obviously, we're putting a lot of energy into execution cases here. Ensure that the teams are continuing to execute at levels higher than the bid thresholds, and obviously, you know, the vast majority of the work there is cost plus work inside of the Defense and Intel business. So, so we are banking on the team's performance, to demonstrate that on execution we can actually continue to improve margins, The other thing that parts of our defense business has been able to do is actually look at their recompete win rates relative to the margins that they are bidding on those recompetes, and they've actually, with a lot of discipline, continued to move margin rates higher up let's call it 10, 20, 30 bps, every single time a program comes up for recompete, which is is almost counterintuitive.

56m 49s

You would think of margin rates coming under some pressure with recompetes, but the team has actually been able to do the opposite of that. When you then compare civil margins improving from a trough defense continuing to bid higher over longer periods of time, and then Tony mentioned the sort of the commercial factory offerings that we are continuing to offer to our customers. Last year was a really good year for the commercial operating segment for us and as we said on the last earnings call, we expect the commercial sales from our business at, I'm going to say, commercial margins to go all the way to about $100,000,000 of top line in FY '28 from about $35,000,000 So when you put the three factors together, that actually does create the portfolio to grind up 10 to 20 bps, [indiscernible] Now, of course, as we win more work, if there is a pressure on margin rates, that is a first world problem we would love to have, because we do believe that we are going to end up generating more EBITDA dollars here but I think that's the path to grinding up margins over time.

57m 54s

Colin, the only thing I would add to that would be, because I think Prabhu got it left to right correct there. One of the in the correlation of what creates margin risk, for this organization. Not only bidding correctly and bidding within thresholds will increase our margin, but executing correctly, if you will, within the stated sort of standardized templates. Will ensure that we don't erode margin. And one of the areas that we're focusing on, because we have so much more bid activity, we expect to win our fair share. Is making sure that transition of large programs goes exceedingly well. Because when you start to look at margin pressure, it generally starts with a poor transition doesn't bode well for the future of the program. And so, we are putting not only our factory capabilities, some of our deeply technically trained individuals in our factory, but across our organization with a very significant focus on solid solid transitions of every major program that we win. So that the first six months are indicative of a very solid margin path for the program going forward. So that's a risk mitigator that we've we've added to our sites here.

59m 9s

And I think the executive team is all in, in monitoring that transition activity as well.

59m 16s

Got it, thank you. And then maybe focusing on, we've had a lot of, I think, noise in one half around government efficiency that for all the hand wringing, it's not really nominal, right? And like, if you think of like, that's, like, 25 stuff without Golden Dome and and, like, 26 requests being pretty far off what both head of armed services and head of appropriations are saying. Maybe talk us through the commentary that you said at the start around the multiyear growth expectations And then maybe kind of thinking through like how does like, what is the best outcome for SAIC?

59m 48s

To the extent that, like, we still get a trillion dollar defense but perhaps the mix is there's different outcomes. Maybe walk us through kind of your your high level expectations of the different outcomes of mix within the different scenarios and what think the team would consider to be the best outcome for SAIC.

1h 8s

So, let me just make sure I'm clear on the question. If the question is relative to the mix of our portfolio meeting across Intel, defense and civilian, over the next couple of years. I would suggest to you that our as we laid out in our strategy, we fully expected not only to pivot our portfolio towards mission solutions, but we were looking to grow our civilian business and grow it disproportionately. We see that effect already in place. So, business right now is about 20% to 22% of our current revenue and our expectation that that may inch up to something like 25% of our revenue over the next few years, I think is still intact. Obviously, operating environment notwithstanding, that business continues to click along. And again, I think that's based on our footprint. If you look across our DoD business, I would suggest there may be some shifts. We mentioned some of the pressures on the Army business. We've mentioned some of the opportunities across our space business and Air Force business. But again, I think we're lined up to take advantage of the current budget environment, even through a CR this year. We've said it's a flexible CR.

1h 1m 21s

They've identified priorities. We've looked against the 17 defense priorities coming out of DoD. And as you saw in the earnings statement, we're lined up against more than half of those directly with the work that we do. So we feel pretty solid there. And then I think there's a very real opportunity for us to improve our position on the intel side as we have a larger Intel pipeline than we've had. For many, many years. And we've got some great opportunities going forward in the Intel space. So, when I look at the mix right now, I don't see a structural reason why we can't grow in the guidance that we've offered. For the next couple of fiscal years, even given the budget environment that we find. Obviously, draconian that would occur, we would have to go back and reassess.

1h 2m 6s

But on what we see line of sight, I think we've got enough budget in the right directions and we're positioned well enough to capture that to underpin our call.

1h 2m 16s

Hey, Colin, the only thing I would add tactically is that if we have to grow, let's call it 5% next year, I think we do need to get book to bill to 1.2 that will support the growth rates we've got out there, think we are assuming that defense budgets are not gonna be healthy relative to the preceding five years. In other words, that we will continue to see some pressure on budgets, think of that as sort of flat to 3% growth, but we do think that not having some headwinds that we've had over the last few years, is going to offer a little bit of tailwind for us and our new business win rates are actually pretty good and they've remained pretty good over the last three or four years, and therefore that combination should get us to that 4%, 5% growth rate, so we don't need a sort of a high growth defense budget for us to be able to grow the company 4% or 5%, we think the things we're doing should help us grow to that level even in the budget environment, we expect to see a little bit more constraint than maybe the last five years.

1h 3m 27s

Got it, thank you for the color.

1h 3m 30s

Thank you. One moment for our next question.

1h 3m 34s

Our next question comes from the line of Noah Poponak. From Goldman Sachs.

1h 3m 42s

Hey, good morning, everyone. Was hoping to go back to the margin Hey, thanks so much for the question. I was just hoping to go back to the margin discussion, Tony, where you were just describing contract terms and execution within them. And I guess there's a decent amount of discussion in the industry about the customer wanting to shift to more outcomes based and perhaps that including fixed price, other things. And I guess there's more opportunity in that as those contract types can be higher margin. But I guess that also shifts risk to the contractor and and current mix is what it is for a reason. So how do you see the opportunity there versus it potentially being pushed in places where it's maybe too aggressive or inappropriate and can impact margins negatively.

1h 4m 38s

Thanks the question, Noah. Look, I think there's been a lot of conversation about conversion to alpha based as well as within that outcome based, the definition or scope of fixed price. And we've been proactively looking across our portfolio with our customers into where the best opportunities on both existing contracts that might be coming up for some form of renewal, as well as bidding with looking at the opportunity to shift to a fixed price. That wholesale conversion, we haven't seen yet in any significant meaningful way. Where entire contracts are coming out or existing contracts are being converted. To fixed price. We do see obviously what we will call contract line items or scope some scope of contracts being fixed price being introduced. And that's been historically a pattern that may increase in this new environment of putting elements. And there are some contracts that are better positioned for fixed price. A lot of our work in our enterprise IT our IT infrastructure, we think is very very prone to fixed price environment. Does that introduce more risk to the contractor? Absolutely. However, if you look at where we've done fixed price, most of that work sits in our civilian business.

1h 5m 59s

And we've been able to hold very solid margins within that business, where we have a mix of T and M, time and material, and fixed price. So, we do have a track record of being able to deliver in a fixed price environment. We also have been really showing up internally our standard delivery framework, so that we are delivering our execution is in a standard repeatable way. Highly monitored, particularly in fixed price. And focus on making sure we bring in personnel that have fixed price backgrounds and experience.

1h 6m 29s

So, in that regard, while there's been quite a bit of talk relative to that, we haven't seen meaningful new bids that have come in a fixed price conversion or changes. But we are prepared for that and again, proactively leaning in with our customers. The assumption there, we see that as a tailwind opportunity for the company as it relates to profitability. We take on more risk, but we have the opportunity to drive a greater margin out of those programs. We have that track record. We acknowledge that that may the government will expect most likely some discounts on the top line for that. But as we take a greater share of that market, we think we can offset any top line risk with some improved margin and profitability. But again, to date, other than direct conversations we were having on some unique programs with customers, we have not seen the procurement engine totally shift in that direction. At least not yet. Probably any other comments?

1h 7m 31s

Okay, I really appreciate all that. And probably just the notion of if [indiscernible] new business is sliding slightly to the right, you would need more on contract growth Can you is it possible to put numbers around that? I mean, much more on contract growth can you get versus what you're already assuming? Or anything you can put around that in terms of the growth rate or dollars of revenue?

1h 7m 58s

Yeah, so maybe a little bit of [indiscernible] A few years ago, our on contract growth numbers were, I'm going say low single digits. That number was the highest it's been last year, where we clicked up about five or 6% of full year revenue in on contract growth. That's data we've shared with folks externally. I think Q1 was right in line with that level of on contract growth if not even a little bit higher than that, and I think to the extent that we can continue to deliver on contract growth upwards of mid single digits, we're going to need less and less of new business to get to the to the, I'm going to say, approximately 2.5% midpoint of our guide for this year. So that's how we're seeing it. Again, because the CR has given a little more flexibility this time around, we are seeing that as a second viable path and of course to the extent that some of the new business wins start to ramp, sooner, then that probably is the difference between whether we get to the low to mid point of the guide range or mid to high point of the guide range.

1h 9m 5s

To me, are the variables. [indiscernible] thank you.

1h 9m 12s

Thank you. This concludes today's presentation. Thank you for participating. You may now disconnect.

Key Insights

SAIC reported Q1 FY26 revenue of $1.877 billion, up ~2% YoY, with adjusted EBITDA of $157 million (8.4% margin) and adjusted diluted EPS of $1.92 (flat YoY); free cash flow was negative $44 million due to timing of receivables, but full-year guidance is unchanged.
FY26 guidance reiterated: revenue of $7.6–$7.75 billion (2.5% organic growth at midpoint), adjusted EBITDA margin of 9.4–9.6%, adjusted diluted EPS of $9.10–$9.30, and free cash flow of $510–$530 million (~$11/share); annual share repurchases targeted at $350–$400 million.
Q1 net bookings were $2.4 billion (book-to-bill 1.3x), with backlog steady at ~$20 billion; subsequent to quarter close, over $2 billion in additional awards received, supporting a targeted trailing twelve-month book-to-bill of 1.2x by year-end, though procurement delays could push this out by 1–2 quarters.
Civilian segment (over 70% of civilian revenue from top five agencies) showed growth and margin improvement; defense business is well-diversified across Army, Navy, Air Force, and Space Force, with some Army budget headwinds offset by strength in other branches and mission-critical programs.
Management remains confident in achieving full-year growth and margin targets through a combination of on-contract growth and new business wins, with robust proposal activity ($7B in Q1 submissions; $28–$30B expected for FY26), and expects margin improvement as a space program transitions to sustainment and civil margins continue to expand.

Recent Transcripts

Q1 revenue grew 2% with stable outlook, margin recovery expected despite procurement delays.

$2.4B, strong pipeline

SAIC delivered strong Q4 results with 6% revenue growth and robust margin expansion.

Market Cap: $4.9B
IPO Date: 9/16/13
CEO: Ms. Toni Townes-Whitley
Fulltime Employees: 24K
Sector: Technology
Industry: Information Technology Services
Country: US
Exchange: NASDAQ

Peers

$0.00

Watchlist

$0.00

Earnings

Report Date

Jun 2, 2025

Reported Revenue

1.9B

Beat +0.47%

Avg 1d Change

6.91%

Report Period

Q1 2026

Reported EPS

1.9

Miss -10.28%

Implied Move 1d

8.53%

Transcript

10m 7s

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18m 55s

Thank you, Tony, and good morning to those joining our call.

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22m 34s

Hey, thanks guys.

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26m 17s

Okay. Thank you, Tony and Prabhu.

26m 20s

Thank you. One moment for our next question. Our next question comes from the line of Gautam Khanna from Cowen.

26m 35s

I was on mute there, guys. Appreciate the comments this morning.

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Thanks guys.

32m 10s

Thank you. Thank you.

32m 12s

One moment for our next question. Our next question comes from the line of Jason Gersky from Citi.

32m 23s

33m 10s

Sure.

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42m 4s

Okay, great. Thanks. I'll pass the line.

42m 8s

Thank you, Chase.

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48m 10s

We do have the periods extended and therefore we do expect to get healthy on the program starting in Q2, but definitely over the course of the year.

48m 22s

I think that was Thank you. Yes, was it. Thank you.

48m 26s

Thank you.

48m 28s

Thank you. One moment for our next question. Our next question comes from the line of Tobey Sommer from Truist.

48m 38s

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50m 31s

51m 54s

53m 14s

54m 33s

Thank you very much.

54m 36s

Thank you. One moment for our next question. Our next question comes from the line of Colin Canfield from Cantor Fitzgerald.

54m 47s

55m 15s

Let take first.

55m 16s

56m 49s

57m 54s

59m 9s

And I think the executive team is all in, in monitoring that transition activity as well.

59m 16s

59m 48s

1h 8s

1h 1m 21s

1h 2m 6s

But on what we see line of sight, I think we've got enough budget in the right directions and we're positioned well enough to capture that to underpin our call.

1h 2m 16s

1h 3m 27s

Got it, thank you for the color.

1h 3m 30s

Thank you. One moment for our next question.

1h 3m 34s

Our next question comes from the line of Noah Poponak. From Goldman Sachs.

1h 3m 42s

1h 4m 38s

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1h 6m 29s

1h 7m 31s

1h 7m 58s

1h 9m 5s

To me, are the variables. [indiscernible] thank you.

1h 9m 12s

Thank you. This concludes today's presentation. Thank you for participating. You may now disconnect.

Key Insights

SAIC reported Q1 FY26 revenue of $1.877 billion, up ~2% YoY, with adjusted EBITDA of $157 million (8.4% margin) and adjusted diluted EPS of $1.92 (flat YoY); free cash flow was negative $44 million due to timing of receivables, but full-year guidance is unchanged.
FY26 guidance reiterated: revenue of $7.6–$7.75 billion (2.5% organic growth at midpoint), adjusted EBITDA margin of 9.4–9.6%, adjusted diluted EPS of $9.10–$9.30, and free cash flow of $510–$530 million (~$11/share); annual share repurchases targeted at $350–$400 million.
Q1 net bookings were $2.4 billion (book-to-bill 1.3x), with backlog steady at ~$20 billion; subsequent to quarter close, over $2 billion in additional awards received, supporting a targeted trailing twelve-month book-to-bill of 1.2x by year-end, though procurement delays could push this out by 1–2 quarters.
Civilian segment (over 70% of civilian revenue from top five agencies) showed growth and margin improvement; defense business is well-diversified across Army, Navy, Air Force, and Space Force, with some Army budget headwinds offset by strength in other branches and mission-critical programs.
Management remains confident in achieving full-year growth and margin targets through a combination of on-contract growth and new business wins, with robust proposal activity ($7B in Q1 submissions; $28–$30B expected for FY26), and expects margin improvement as a space program transitions to sustainment and civil margins continue to expand.